Creative

Wealth Advisors

The Top 10 Do’s and Don’ts of 1031 Exchanges

Do purchase your replacement property in the U.S. or U.S. Virgin Islands.

Foreign investment property does not qualify.

Do acquire property with equal or greater debt.

You pay tax on debt not replaced.

Do reinvest all exchange proceeds

You pay tax on proceeds not reinvested.

Do note in your P&S agreement your intention of doing a 1031 exchange with the proceeds.

Your Qualified Intermediary can give you the exact wording.

Do plan ahead so you can settle on your replacement property within the 45 day identification period.

Real property has unforeseen pitfalls and after forty-five days you cannot add an identification. We help clients plan so they can be earning income from their replacement properties often in the same week they close on their sold property.

Don’t find a Qualified Intermediary online or from a phone book.

People have lost a lot of money giving their exchange money to ‘so-called’ Intermediaries. And after they lost their money they still had to pay any deferred taxes to the IRS! We work with bonded, insured, professional Qualified Intermediaries.

Don’t buy a real estate mutual fund or REIT.

Only real “like kind” property qualifies for replacement property.

Don’t reinvest the proceeds in property you already own.

Don’t dissolve partnerships or change the manner of holding title during the exchange without consulting an expert on exchange entities (usually a tax attorney).

Don’t proceed as if you have 180 days to complete your exchange.

Time is important. Exceed this time limit and you lose the benefits of the exchange, which means potentially paying a lot of taxes. We help our clients select appropriate 1031 exchange property early in the process – many times our clients start earning income from their replacement property the same week they closed on their sold property.

Check the background of Advisory Group Equity Services and Ronald Birnbaum on

DST and 1031 Real Estate Exchange investments are limited to accredited investors. An accredited investor is one who either has a net worth (excluding residence) of at least $1,000,000 or more or has income of at least $200,000 ($300,000 combined if married) in each of the last two tax years with expectations to make that much in the current year. As with any real estate investment, there are various risks including, but not limited: to loss of principal; variations in occupancy which may negatively impact cash flow, illiquidity, and limits on management control of the property.